Which of the following arguments for farm subsidies is most closely associated with the parity concept?
A. Although farmers produce necessities for the rest of us, they receive low incomes that are
declining in real terms, and should therefore receive price and income support.
B. Farmers sell their output in purely competitive markets but must buy inputs from
imperfectly competitive firms.
C. Farmers cannot fully insure themselves against the risks unusual to farming, such as
floods, droughts, and pests.
D. The "family farm" is an American institution that should be protected and nurtured.
Answer: A
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The annual cost of producing the entire output of goods and services in the economy
A) includes durable goods but excludes nondurable goods. B) is total income. C) can be calculated entirely on the basis of financial transactions. D) includes financial transactions.
When rates of pay and job assignments are determined by administrative rules and implicit promises of management, then a firm is operating in a(n)
A. internal labor market. B. competitive labor market. C. risk-sharing market. D. human capital market.
The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
Which of the following is a TRUE statement?
A) Everyone benefits from free trade. B) Exporters benefit from trade and importers do not. C) Consumers benefit from trade and producers do not. D) Free trade harms domestic producers of goods that face import competition.